Income Tax Appellate Tribunal - Delhi
Assistant Commissioner Of Income-Tax vs Smt. Sudha Burman on 3 June, 2002
Equivalent citations: [2002]83ITD327(DELHI)
ORDER
Y.K. Kapur, Judicial Member
1. These two appeals are filed by the revenue against the order dated 28-4-1997 passed by CIT(A) for the assessment year 1994-95 and 9-9-1996 passed by CIT(A) for the assessment year 1993-94. Since they involve common question of law and fact they are being taken up and disposed of together. The only challenge in these appeals is to the order of CIT(A) who had ordered deletion of the addition made by the Assessing Officer under Section 2(24)(iv) of the Income-tax Act on account of expenses incurred on the foreign tours of the wife of the director.
2. The common facts as they emerge out of the record is that the assessee is the wife of Shri A.C. Burman, Chairman of M/s Dabur India Ltd. and has income from house property, business and other sources. It is stated that the husband of the assessee had undertaken several trips abroad during the relevant period and his wife accompanied him on these trips. The company had undertaken the expenses on tickets for her visit to abroad. The Assessing Officer disallowed 50 per cent of the expenses and treated 50 per cent of the amounts spent as the income of the assessee under the provisions of Section 2(24)(iv) of the Income-tax Act.
3. The assessee being not satisfied with the action of the Assessing Officer filed an appeal before the CIT(A) who vide the impugned order was pleased to set aside the order of Assessing Officer which action of the CIT(A) has led the revenue to file the present appeal before us.
4. At the time of hearing of the appeal, the learned DR supported the order of the Assessing Officer and submitted that the trips undertaken by the assessee as observed above who happened to be the wife of the chairman of the company were not in connection with the business. After having said so, the learned DR submitted that the onus of proof that the trips were undertaken by the assessee at the behest of the company and in relation to the business of the company was on the assessee which onus has not been discharged by her. That apart, the learned DR drew our attention to the resolution of the company placed on page 5 of the paper book which is reproduced below : , Resolved that the consent of the Board be and is hereby given for travelling of the wife of concerned wholetime/Managing Director of the purpose of business of the company within India and abroad and expenses incurred thereon.
5. After referring to the resolution, the learned DR drew our attention to the date of resolution which is 20-6-1988 and then submitted that the resolution is of general nature which authorises the wife of the director to accompany them on their trips abroad, in relation to the business. After having said so, the learned DR submitted that it is incumbent upon the assessee to show the necessity of her accompanying her husband on the trips undertaken by her because of the general nature of resolution. He then submitted that justification of each trip is to be submitted by the assessee and where the assessee is not in a position to give justification in accordance with the provisions of Section 2(24)(iv), the additions have to be made at the hands of the assessee with respect to the expenses incurred. The learned DR submitted that the information with regard to the necessity for a trip abroad is a special kind of information which is in the special knowledge of the assessee and, therefore, it is incumbent upon the assessee to disclose this information by a positive evidence before the tax authorities. The learned DR then submitted that the best evidence which can be said to be positive evidence having not been disclosed by the assessee in relation to the necessity for which the trips abroad were undertaken having not been disclosed by the assessee, the assessee has failed to discharge the onus. The learned DR submitted that the revenue cannot lead any negative evidence to show that the trips were not required as the best information is in the hands and knowledge of the assessee.
6. To counter the argument raised by the learned DR, the learned AR submitted that the expenses were incurred by the assessee in relation to the business of the company and, therefore, he submitted that these expenses ought of have been allowed by the Assessing Officer, having failed to do so, the CIT(A) was right in disturbing the findings of the Assessing Officer. The learned AR further submitted that expenses were in relation to the business of the company and he while placing reliance on the resolution reproduced above submitted that if the revenue contradicts the assessee it has to lead evidence to prove that trip was not for business. The learned AR in support of the contentions raised that the trips for business purposes relied upon certain judgments which we shall deal later.
7. We have heard the parties and taken ourselves through the record. Before deciding the issue involved in the appeal, we intend to take up the issue as to who is to discharge the onus whether it is revenue or the assessee that the trip was required and was in relation to the business. The initial onus to discharge this burden is on the assessee. Once the assessee discharges this burden by a positive evidence then the onus shifts on the revenue to contradict but unless and until the assessee discharges the onus by a positive evidence we are afraid we cannot expect the revenue to contradict the same. In the light of this, we need to examine as to whether the assessee has discharged the onus by a positive evidence. For appreciating the nature of evidence led, we have scanned through the record and find that except the resolution which has been reproduced in the earlier part of the judgment, there is no other material placed on the record to substantiate the claim with respect to which the allowance has been claimed.
8. It is not in dispute that the trips were undertaken but the dispute raised by the revenue is that the trips were not in relation to the business of the company. All that we need to find out in these proceedings is as to whether the trips were in relation to the business of the company or not. When we started to examine this, we find that apart from resolution, no material was placed on the record in support of the claim. When we look at the resolution, we find that the resolution was of 26-6-1988, i.e., the said resolution was passed about 4 years back which indicated that the expenses in relation to the trips of the wife of the Managing Director or Chairman or wholetime Director shall be borne by the company. We stop here for a moment and find that the company has taken a policy by means of this resolution to bear the expenses which covers the area of resolution. This resolution we can very safely say is of general nature and supports the policy of the company but what is lacking is that it does not mean that each and every trip undertaken by the wife shall be borne out by the company. In 1988 when the resolution is passed, the company could not anticipate how many Directors with their wives shall be visiting abroad in near future or could have anticipated the necessity of trips of the wife to be undertaken four years hence, there was no agenda or programme at the time of passing of resolution. This leads us to an irresistable conclusion that for each trip, there has to be justification for the wife of the person concerned to accompany him and unless and until there is a justification for the wife of the concerned Director accompanying him, we are afraid such an expense cannot be allowed. We as stated above have scanned through the record to find any evidence which could justify and correlate the trip undertaken by assessee but we could not lay our hands on a single document except the resolution referred to above. In the absence of such record, we feel that the assessee has not discharged the burden laid upon her.
9. During the course of hearing it was suggested to us that after the resolution which has been reproduced above, the onus stands transferred to the revenue and it is for the revenue to contradict that the trips were not in relation to the business. We are afraid, we cannot agree with such an argument as it would tantamount to directing the revenue to lead a negative evidence which it cannot because of the reasons that all these facts are in the special knowledge of the assessee and not the revenue. For this reason, we reject the argument raised by the counsel for the assessee and hold that the assessee had miserably failed to discharge the onus which was casted upon. The learned counsel for the assessee during the course of hearing referred to Special Bench Decision of the Bombay Bench of the Tribunal wherein also the issue was pertaining to the expenses incurred in relation to the foreign trip by the wife. The facts in that case were that the Chairman and Chief Executive of Glaxo Holdings had extended invitation to Mr. and Mrs. Butha Lingum and his wife who accompanied him. The element of social engagements was also there which is not the case here. The resolution does not reflect any such social programme and there is no other material which suggests the same. The other case relied upon by the learned AR is also in ITO v. J.K. Synthetics Ltd. [1986] 18 ITD 490 (Delhi). In its case, the wife had accompanied the employees of the company. The company wanted to encourage the loyal employees to create goodwill among the employees to work with greater loyalty. Even this judgment does not advance the case of the assessee as there were different facts. The other case relied upon by the learned AR in ITO v. RF. Ferguson & Co. [1986] 19 ITD 620 (Bom.). A case where the partner of a company along with their wives went abroad to attend conferences which had also been attended by the associates from the other part of the world along with their wives. The technical meeting at the aforesaid conferences were also followed by social gatherings where the wives of the other participants joined. It was in this set up the claims were allowed. Even this judgment is based on different facts and does not advance the case of the assessee.
10. Before we refer to the other judgment relied upon by the assessee we may at this stage and here itself point out that there is no dispute on the proposition of law that the expenses incurred on the foreign trips of the wives are to be allowed provided they are in relation to the business of the company. The words in relation to the business of the company are very relevant and are purely the question of fact and we repeat whether a particular trip in relation to the business of the company or not is a pure and simple question of fact and once we held that the trip is in relation to the business of the company then certainly the expenses has to be allowed but if we hold it otherwise, we are afraid, the situation would be otherwise. In the present case as we have held above that the assessee has failed to discharge the onus that the trips were in relation to the business of the company, the question of the allowance of claim in these circumstances does not arise.
11. After having referred to the decision in the ITD relied upon by the learned AR, we now refer to the certain other decisions relied upon by the learned AR in support of his arguments and which are in 208 ITR 141 (sic), CIT v. Aspinwall & Co. Ltd. [1999] 235 ITR 106 (Ker.) and CIT v. Appollo Tyres Ltd. [1999] 237 ITR 7061 (Ker.). In all these judgments, the expenses were allowed as it was held that the trips were in relation to the business of the company which is not the case before us and, therefore, the judgment relied upon do not apply of the facts of the present case.
12. Another reason which makes us disturb the findings of the CIT(A) is that how could a company visualise some meeting to happen in future would be required to be attended by the wife. Neither the meeting nor the trip was certain when the resolution was passed. What would be the business conditions, exigencies requirements is also not disclosed is the resolution. What were the circumstances, business exigencies and business circumstances in which the assessee accompanied her husband is also missing. What benefit has accrued to the company on account of her visit abroad is also not disclosed. We feel that on all the trips special instances for the wives who accompany her husband are not only to be indicated but have to be justified which is also not the case here. The entire case record is silent.
13. We in these circumstances hold that the Commissioner ought not to have interfered in the finding of the Assessing Officer. In view of the discussion above, we feel that the CIT(A) committed an irregularity in interfering with the findings of the Assessing Officer and have, therefore, no hesitation but to accept the appeals of the revenue.